The Morning Report
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Stephen P. Gardner, one of the masterminds behind San Diego’s biggest corporate scandal of the past decade, was sentenced today to 97 months in federal prison.
Gardner, the former CEO of San Diego-based Peregrine Systems, pleaded guilty in 2007 to charges of conspiracy, securities fraud, and obstruction of justice that grew out of what prosecutors call a scheme to defraud Peregrine’s shareholders between 1999 and 2002. Other company executives, including former Chief Financial Officer Matthew Gless, also pleaded guilty to fraud and other crimes. Gless is scheduled to be sentenced Wednesday.
Gardner could have been sent to prison for 20 years for his crimes. Judge Thomas J. Whelan, however, gave Gardner the lighter sentence because of his guilty plea and testimony against other Peregrine executives. Whelan also ordered that Gardner forfeit $1.3 million from real estate sales and brokerage accounts, and is scheduled to order restitution at a hearing on Feb. 23.
Peregrine was one of San Diego’s biggest success stories of the 1990s tech boom. Shares in the business software company skyrocketed between 1999 and 2001 as Gardner and other executives falsified the company’s revenue and earnings.
Peregrine’s stock price collapsed in 2002 after it publicly disclosed its accounting improprieties, which caused more than $3 billion in shareholder losses. Peregrine declared bankruptcy later in 2002 and was bought by the Hewlett-Packard Company in 2005.
Among those caught up in the scandal was Padres owner John Moores, who served on the company’s board of directors from its founding in the early 1980s until 2003. Moores, who was never charged in the case, made hundreds of millions of dollars selling Peregrine stock during the boom years.